Earnings call transcript Q2 2023

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Operator

Good day, and welcome to the Clipper Realty Second Quarter Earnings Call. At this time, all participants have been placed on a listen-only mode and the floor will be open for questions and comments after the presentation.

It is now my pleasure to turn the floor over to your host, Larry Kreider. The floor is yours.

Larry Kreider

Thank you, and good afternoon. us second joining Clipper of for Inc. Realty, you for quarter the XXXX Thank call. conference earnings me with of Executive and Co-Chairman call the Chief J.J. and Participating Officer; today’s Board on are David Bistricer, Operating Chief Officer. Bistricer,

statements disclosed Please be are materially subject These may statements, from made be indicated in numerous forward-looking aware during Form call in XXXX such uncertainties, risks those not the on deemed on updated including may that annual results actual statements and by our to report are the XX-K XXXX and quarter website. and those which accessible the www.sec.gov historical company’s are differ second statements. that report XX-Q, forward-looking and Form at

X, statements only undertakes date the company of them. reminder, no duty forward-looking a to As speak and XXXX, update the call, as August the of this

During depreciation refer this financial before adjusted funds certain adjusted amortization operations press net or measures, and with the XX-Q interest, of financial and or including measures Please non-GAAP financial income earnings call, NOI. a or non-GAAP directly EBITDA; operating these release, see comparable today AFFO; may from taxes, supplemental for measures. to posted management GAAP most and reconciliation Form information financial our adjusted

call the CEO, to With will now that, I turn our and Bistricer. Co-Chairman over David

David Bistricer

will our Good performance including leasing you, Thank to will new turn Larry. and level will activity, XXXX for call second an some discuss the J.J, quarter provide who earnings I business to call developments. update the then afternoon, performance. over and property welcome I Clipper to exciting Realty.

our about quarterly speak performance. financial will Larry Finally,

We your will questions. take then

prior quarters. trends positive the have with in continue reported results operating Our we

across rents all December exceeded our second leased, were continue House and market-based new Tribeca XX% see At property at properties reached a 'XX. were and Brooklyn, of at prior our House In than the foot, properties. record the rental Manhattan overall $XX the portfolio. quarter, levels $XX We a to Clover strong rental XX% leases $XX by XX% entire demand foot, better end a new and leases per in in

we entered with finance current to quarter laws a property. expected City new of annual of private housing with XX-plus-year-old will XX, have under At and Department property New Flatbush transformative for to capital in on committed New of improvements as the we available the guidelines Preservation and Yorkers, is all the of Article adjusted period phase address the over RGB three-year Gardens, maintain which large based a have under Housing into make rents rent which for many XX-year increases, that York agreement completion a issues

in an the and formerly about three guidelines. for of wage part improvement for rates at As capital receive prevailing to million, the pay median improvements to a rents last at $XX the commitment has within the households, and The years capital amount. property. to amount homeless three-year committed Maintenance plan tax vacant aside set income agreement with units based Flatbush Gardens the the area of a to HPD current categories nine-year property could the XX Article same on of exemption, improvement employees increase over follows the three-year

The has that pleased to one schedule thing XXXX about property mile House, at This Brooklyn, House, Prospect online this come a Pacific Heights, rate Atlantic abatement a are the we above Operationally, up on X%. Terminal XX branded quarter now ground-up Pacific as XX% free cap and XXX affordable, is has years. and and will a and Pacific has budget. lease from market, it Hub. tax XX% of Barclays in well is progressing for Center development The on located property units,

of and closing the issuance Pacific bibs be first schedule, loan, a financial upon full Abacus, million of five-year full $XX loan, targets to the in previously and achievement after As Initial XX we of $XX reduced upon interest construction of was will million X.X% million bibs ahead by reported property's due XX reduced replaced lease-up. quarter, loan lease-up. available $XX further

D XXX commercial XXXX in and affordable, the we free tax building residential and a of begun square the we foot development units, X,XXX XX% a an amenitized door, total parcels with rentable abatement, space. land Street, square have Next ground-up XXXX fully XXX non-story, at space, feet market, XXX,XXX of and bought residential XX-year into XX%

financing which a shortly acquisition of We loan to paid completion we parcels, scheduled all through construction. funded $XX for million, construction are partially convert the the million the to of into with $XX us take

of rate long interest buttressed average a properties, years. are an continued is and of rate fixed duration of operating our by we an debt with the XX% on to X.XX alignment, of all we relatively average X.XX%, believe As of duration which

Our subject is basis. by massive asset to portfolio debt and carve-outs, standard financed is cross-collar-wise. We non-recost, limited a on not our

With million, allow year, results, significant I million, as second our will us respect offset AFFO $XX.X our just duration operation results the These improved properties quarterly million increased our quarter and needs and over NOI we reporting With quarter mentioned. last second are a construction on and to the $X.X high record record inflation, leases demand residential to we detail. as improvements I cover cost, the J.J of to represent high rents. to leasing, a revenue of regard look record of of of to $XX.X further expenses result short of the by of high

turn to provide the an operations. J.J update who now will will on over call I

J.J. Bistricer

quarter our second at remained very pleased Overall of am rates rental rents renewal performance at quarter, our lease properties. the Thank rents I exceeded leasing previous all XX% at over you. all residential to X% above continues market new and rental occupancy high, levels. by report in record that properties' by properties end and our At residential to the free the improve. rates over XX% are second our

market see at free Tribeca to our continue rental properties, buildings. We strong house Clover and both particularly demand House

XX% XX% last to averaged has occupancy over months. XX least the Our

from period. $XX previous In same previous rents an XX% renewals the increased to quarter, $XX on the foot square steadily rents. over X% rents and over per a We and second per $XX were new have were rents leases average rent foot increase on increase $XX per foot, over

rent expect and end overall to of for demand. grow quarter square the We a is to free progressing at another leased second per least the the result XX% was affordable Leasing came at The at House Pacific of online of continued beginning market quarter. at as strong the and continue foot well. XX% XX% quarter property

in in We off. run third to quarters initial when lease and over expect full concessions a up of rate fourth X% XXXX leasing the cap

agreement begin XX-year-old Article XX HPD as agreement that the also new very on help needed continue made We to XX think complex. of XX-building large improvements the June operating under New York At the large with Flatbush described. making infrastructure Gardens us property, City we are expected XX-acre completed will this of just excited we a

agreement. X.X% of new per incomes roughly provided overall X% last leasing XXXX changed we recommenced expect allow will full the Most for to increase as than as was seek Gardens, our importantly, the proceed years the subsidized at Article two the vacancies annual activities residents to in smoothly property Flatbush more to occupancy we XX modestly of Article agreement to generous maintain At leasing the under guidelines arise. the XXX stringent which looking for by previous second including XXX% These than averaged annum. foot, new at foot, previous modestly the nearly we are higher completed. Overall have leases In rents. X% increases per XX increases These leased in median area the over are more board under rents now the averaged rents before continue renewals the per to higher just quarter $XX the $XX the than guideline limits. incorporating rent quarter, X% and

year. overall the begun again to rents per $XX.XX at versus have property for $XX.XX As quarter the of increase end rising end the at average a to of the foot last result,

and Our continue other Livingston Street, Street properties, XXth XX residential Aspen well. perform West to XXX

While remittances overall challenges these rental collection remain a the increased average from above occupancy Rent lingering rates second average and collections Rental Program was Rental in this quarter despite $XXX,XXX and has XX% XX% ago. the benefit leased the of properties $XXX,XXX across the strong rate but year rate have quarter. portfolio pandemic. have Landlord The we LRAP versus for Emergency to been Assistance the Program totaled or ERAP XX%, York Assistance quarter at from under lower last which over or the a continued New

ahead, optimizing best fully we transaction focused and occupancy, for the Looking on remain pricing expenses business XX and implementing position growth. ourselves Article across to the

financial to call I who will our over Larry the discuss results. turn will now

Larry Kreider

you, Thank J.J.

the the AFFO For to the residential but of million the revenue or excluding increase $XX.X million came lease up. percent million primarily interest online last and partial from a of the and expense year increased House million higher only reflected which impact $X.X full increased to million impact six million rates by the initial second the $X.X was this The quarter, increased $X.X record $X.X due impact Pacific from year XXXX discussed. and as reported substantially properties as this quarter excluding $XX.X that strong was year million $X.X was occupancy in Pacific mentioned excluding year stabilized from House or Gardens. debt $X.X million. of reflecting J.J was high last and $XX.X quarter Bad last of to all House. as slightly and Flatbush million excluding continued or leasing second second by same from for $X.X J.J the to million last NOI quarter to higher expense collections Pacific $X.X million Pacific revenues year increased

expenses partially impact On primarily annual at of the year repairs and properties excluding side, were year to and changes offset lower Gardens Pacific follows. $XXX,XXX Flatbush year Street over fees expense and maintenance last Property than by operating in House costs. increases Livingston XXX the the as payroll due key were

payroll as prevailing increased of under estate pay excluding the expect expenses Real to year approximately increases. estate Gardens second and taxes $XXX,XXX on insurance the impact year year and XX in wages and $XXX,XXX real taxes to cost approximately of last Flatbush increase due our by in mid-year due increase a Pacific to We agreement. to $XXX,XXX by quarterly $XXX,XXX commitment the Article other regular House, the quarter insurance result

primarily Future administrative West include conversion this for by capitalization balance projected Flatbush additional to year amortization. property as of of were second the LTIP interest House debt Manhattan those a third its costs at variable rate for on of due the expense the the in terms million partially elimination according interest and at and in to Gardens the offset $X.X to year net capitalized quarter Street estate quarter the of increased the XX House of to Pacific Pacific $XXX,XXX our the $XXX,XXX we transaction quarter Interest interest year-on-year, real which will income $XX.X approximately otherwise and sheet Payroll taxes payroll from to by XXX cash increased due associated not year. cash second higher of with project Article restricted unrestricted Dean by million XX result exclusion With higher and in deposits. and development million cash. Street have $XX.X on regard in in

an previously disclosed as In to construction on February House million and the from based since the we loan certificate decreased X.XX% loan occupancy. $XX X.X% refinanced of Pacific issuance has mortgage of with rate

Dean enter is amounts expect We to loan standard our portfolio future. cross-collateralized. We not an and debt and non-recourse XXX in operating Street property the on car to construction our finance asset-by-asset a is basis near subject for limited the

debt until X.XX years. with an no maturities have We duration of average properties overall XXXX any on

of fixed paid of a quarter. August dividend share of cents amount At XX. rate are second XXXX, same of XX% on at per our to record the properties XXrd shareholders on was for debt be an Today The will announcing average the quarter dividend end at operating X.X August last the X.XX%. of as we

Let now call the to for David back remarks. over me turn concluding

David Bistricer

and focused you the on for to Larry. through continue XXXX. improvements the We We quarter upgrading to portfolio. into Thank remain operating accelerate look efficiently next

to themselves. forward three to growth would myriad that questions. Pacific a like House line optimizing the on may gardens, and capitalizing including the now open developments I look and present We opportunities for of possibilities these established other

Operator

first The now Horne Thank James. for Instructions] floor with is The Buck Please proceed. questions. is from you. question open [Operator Raymond

Buck Horne

more as guys the guys XX how just the proceeded the together, revenue ask from achievement the if little you'll on that well. afternoon congratulations for little How program a into get from a going XX the on on negotiation that you with good on again a and background of just Article came getting and of some us that? enhanced also does you feather little give over us and give a can a maybe detail couple was where reimbursement company for think just get to revenue those property I years I start Article rental you're just the color more to big, Hey, maybe tenants reimbursements. how how could kind you deals, assistance the think big but new next for

David Bistricer

Buck. Okay, some new, you time. to speak New in is available not City It's nice to David. transaction been York again, Article for has The quite XX

In just the the impressed we them to of many and closed has run for them fact, our showing in an the were Article transactions to they property comfort on was property that applied in they millions made application and for HPD and company came, June came last it's multi the XX this it a something we're them gave I the J.J the they how property, Article attention, spent HPD of many particularly dollars investment of them that to decade property, this and over of one the so as such inspected approve think by were by the we property impressed a talking management spent lot XX. that and and time good that were

themselves, some them program, but it's so different of they some it to into this balance company an rents the time some it's that take back reassurance to real to a the a infrastructure. implemented, income time out it's program, but the going take city make get that rents, to the and investments has is a be new the to quite what definitely going implemented us very gave The it's subsidized is

Buck Horne

back should timing we is fantastic as on and and spending the the over part how next, that period, right, level XX the into projected of ramp this spend CapEx about of will kind pro-rata we over XXXX, or that that? the how per should CapEx kind up three year over X after a really million of think to, year that All it will going million quickly year be of Flatbush think of spending

David Bistricer

too think do that. I into early J.J to to? get So want

J.J. Bistricer

Flatbush clarity a ago, Hi to it likes this dad side you city of more so much years made is upgraded affordable to you to I'll restrictions that it stabilized why housing maintainable try they the said know stock few just reaching units Buck, they city very clear XX the J.J need be a it's a rent the here, is and certain some because the is to of you lot mandate specifically that reason what housing has as is XX especially plus understand now restrictions. just shelf their achieve my give the add Article income for garden and generally that some to or life are are and there on minutes

hurt other all City tenants so process the creative for could a the good with way is not all of they go properties elements that these keep the therefore that the New this to properties comply city in shape, with So York work and in codes owners on and the in

the at win-win and we a it it units the benefiting applied to City clear so because how reason that's it units and has has that they why everyone, that's helped look want quarter to that X,XXX clear HPD from that's get XX,XXX size again in Hall it. lot it the they're it's and situation a this mayor we it made for do said they this is them liked around and there I so that's made X,XXX for So think for

on and hired to what of done through is very Now the HPD's a things are that we CapEx with it of process was in the the an way demonstrate the engineer terms oversight that deliberate expenditure or works and repaired item a depending is be need individual each they them within repaired and upgraded for timeline there three be done whether years. of to time that have a of replaced to period

be are are let's they're and and first them critical less be in remaining more less pressing of going Some going the ones done ones, to pressing the two it year years. call over the done to

have what get that's million average between three-year to a ten that estimate program estimate dollars this on we eight we So a it's approximately done and year we somewhere could

obviously reach based the what approved. be estimates to value it's on the engineering pretty was much done the numbers and these and not t been that's HPD that to it's exactly that but

it's looking million an looking it. if at So annum per that's for approximation you're we're ten around how

Buck Horne

right it. very helpful. Got All

J.J. Bistricer

And once again this happened in it's happy that June to a adjusting as we're so well. year so

Buck Horne

pulling were the written it, just some last transaction off deal? are deal in just looks got One to for related me a Got is costs you looking XX like market it, completing the there in that got quarter Article related to at is serious new that that Flatbush guys potentially or it. pursuit off one

Larry Kreider

Larry. XX owner expenses some off preservation it's paid and to related exclusively Those deal. of know Article it's transaction and sponsor. nominal We Yes. who you our nominal fees Buck, Hey write the were attorneys housing to our was those had costs some to

Buck Horne

right it. guys very congratulations. Got clear you All thank very helpful, very,

David Bistricer

you. Thank

Operator

Aaron [indiscernible] The JMP live. your next is line Aaron is question Securities. from with

Unidentified Analyst

Hey guys the you on the wondering Flatbush like government tax the the before able to components capital if assistance. for Gardens net being agreement to requirements rates benefit tenants from at changes receiving have some reimbursement finish spend start you and of

David Bistricer

because Aron. the immediate is it's bill longer the in tax words Hi benefit no opposite. abatement July tax actually owed. other was the The or X not It's paid

already which get on a subsidized are is have is renew work to in the abatement are with do a We is we rent that's immediate. which requirement. increase with the in calling an benefits the do in having benefits as standard rent regulatory new tenants tenants above section the what is going charge even from the subsidies as part you the is or existing starting phase regulatory that that bring the to can The are either that work subsidies you the city the of agreement the to and and but XXX we legal something you we if that tenancies rent

Unidentified Analyst

the the if and Right dispose of benefits ever XX are to the Article new transferable of you owner decide to then asset? a

David Bistricer

to it Only transfers the meaning stays it new if city a the agrees yes it but with property

to by would get HPD. owner have approved

Unidentified Analyst

Right execute take you guys about that on you if long it how to did and thought process

end? beginning from to

David Bistricer

January to June.

Unidentified Analyst

Got you.

at guys yield and Pacific you XXXX on what of the are Okay looking then for

stabilization?

David Bistricer

we're rate roughly said I little might higher all the think shook Well cap it that's think it out. X% a to we be we as that but building

Unidentified Analyst

transparency Dean Street a to you Do as give too projection enough or well to on now early tell? have

David Bistricer

it's just estimate we're to I would as same estimate, Pacific because only an about going be started getting that's Street. the

Unidentified Analyst

All right. right the so Well the to results significantly to also with company earnings agreement it's nice in direction your see in guys. really the time and is going looks city that good be appreciate

David Bistricer

Thank you.

J.J. Bistricer

Thank you Thanks. much. very

Operator

The Craig Riley B. with Craig proceed. please is next from question Securities. Kucera

Craig Kucera

Good afternoon guys.

Gardens by were but know You that a either excited expanding potentially were going go direction few the does this on and that like and but go again? that XXXX possibly back XX way impact you of last Article process if to Flatbush agreement in vertical. you've been you years developments ago couple years about focused does XXX I other decide to

David Bistricer

we of that's Article be for what that to think of don't doing going about lot to that moment. going implementing work that think know spoke a have this the we're that's work the be there just to XX at moment We we do we're how doing. you We kind

Craig Kucera

where I know when you guess and a know you up really see to those that how and be Pacific get at occurs bring do some to rapid in XX a know expect obviously close fully draw you enough able and fair additional leased you rate? that targets House, once Okay, you lease reduction down to does of you're an that financial to into million

David Bistricer

very I be will gotten this in you've the strong next as point XX the to and market seen estimate think is our best we've days there.

Craig Kucera

XX there you an draw on what being able million? or be fully on to point leased be guess You'll it you'll extra I at know

David Bistricer

able in days up know to down way at it draw and XX% XX should that be time. be lease we we within should the Well you

Craig Kucera

it. Okay appreciate for thanks that's it me

Unidentified Analyst

Sure. Thank you.

Operator

I to remarks. answer and management to concludes for session. like closing floor back the question any turn now would This the

David Bistricer

much everybody I Thank for this next see evening you. you quarter pleasant very us good joining you and call hope Thank again. with wish a and to

Operator

conclude and does ladies you gentlemen today's call. Thank this conference

day. at You you Thank may have time wonderful for and disconnect lines your this participation. your a

Clipper Realty (CLPR) 4 Aug 232023 Q2 Earnings call transcript